The courier, express, and postal industry is the largest segment of the transportation marketplace worldwide. This blog will provide a personal perspective on the challenges faced by firms in the industry as they serve an increasingly competitive market.

Sunday, August 21, 2011

The most surprising fact in the post associated with the growth in the Postal Service's parcel business is the 14.2% growth in Parcel Post volumes. Given that parcel post involves the delivery of single-piece parcels and Parcel Post is more difficult to purchase on-line than other Postal Service's, I can think of only three explanations.

Parcel Post volumes comes from those residual parcels that carriers selling joint-line parcel select services that are for destinations with too few packages to get the Parcel select rates.

9 comments:

At I work, we use USPS services through Endicia's Label Server as well as FedEx services, including FedEx SmartPost. For domestic customers, we offer an option called "Economy Shipping," usually for free since e-commerce customers don't want to pay for shipping. When this shipping method is selected, we or more less use this algorithm:

In part (B), if there's a tie, then Priority wins. If the parcel is valued at more than $150, then it "nudges" in favor of the FedEx options (since with FedEx the tracking is better, the parcel at least has some insurance, and you can get problems resolved easily). But for lower-valued shipments, we'll take the USPS "it usually gets there" service, especially when customers are so unwilling to pay for shipping.

We didn't change our algorithm over the past two years, but the USPS has messed with its rates. The result is that Priority mail volumes went down while SmartPost and Parcel Post volumes went up. (Since we were already integrated with Endicia, it's not like we had to do any work to facilitate this switch.) We see the Priority mail usually still wins for zip codes that are on the East coast (where we are), but it usually ends up choosing SmartPost for the West coast. The stuff in between usually ends up going Parcel Post, presumably because SmartPost can't offer the super volume-based discounts to those destinations (but that's just a guess).

Postal management quit sitting on their hands and realized that this was an important part of the USPS and started to maintain better control of of deliveries, as in Delivery Confirmation.Amazon .com didn't hurt either

As a Rural Mail carrier, a majority of the parcels we deliver are from FED Ex and UPS. This is called the last mile delivery program. People order online and although method of shipment might be FED Ex or UPS, it is delivered to the final destination by postal employees. UPS and FED Ex basically contracts out the postal service to deliver these parcels. These parcels are dropped off to the various post offices by the FED Ex and UPS drivers.

Remember the former USPS Vice-Pres (one of 42)Bernstock? He resigned after it was discovered by OIG that he gave an advertising contract to a former private industry assoicate (the "if it fits it ships campaign"?). If you watch cable/satellite TV , those commercials run on many networks(did the 14% PARCEL INCREASE EVEN COVER THOSE ADVERTISING COST?)

And the most glaringly obvious reason for USPS cots is the 110,000 management jobs versus the 465,000 clerk/carrier jobs. A 1: 4.5 manager:worker ratio is INSANE. Not to mention the $5.5 billion a yr, for 10 yrs, retiree healthcare pre-payment, lowest postage rates in the world (thanks to the endless mail industry lobbyists whining).But, the clerks and carriers (whose jobs comprise the VAST majority of 200,000 job cuts since yr 2000), just must not be working hard enough. Go ahead bash us some more.

As a window clerk in Milwaukee, I have seen more customers DEMAND parcel post, not just because it is a chepaer alternative to Priority Mail(customers on budgets)...but customers have learned that it dosent take as long to be delievered as it used to. Customers have also learned that just by adding delivery confirmation, packages get delivered faster.

The reason for this is because management treats ANY package with D.C. like gold and will make every attempt to get this mail delivered as quickly as possible. Timely delivery increases "scores" that are directly tied to performance goals. I have personally seen employees sent out for overtime JUST TO DELIVER PARCELS THAT HAVE DELIVERY CONFIRMATION ON THEM. Not just Priority Mail, but Parcel Post AND Media Mail!

Customers who wait in line (yes, we still have wait times) will literally speak over the clerks, and tell the customer to send Parcel Post while we "explain the feature and benefits" of Priority Mail. I cant agrue with them...we treat the PP like it's Priority Mail.

As a window clerk in Milwaukee, I have seen more customers DEMAND parcel post, not just because it is a chepaer alternative to Priority Mail...but customers have learned that it dosent take as long to be delievered as it used to. Customers have also learned that just by adding delivery confirmation, packages get delivered faster.

The reason for this is because management treats ANY package with D.C. like gold and will make every attempt to get this mail delivered as quickly as possible. Timely delivery increases "scores" that are directly tied to performance goals. I have personally seen employees sent out for overtime JUST TO DELIVER PARCELS THAT HAVE DELIVERY CONFIRMATION ON THEM.

Customers who wait in line (yes, we still have wait times) will literally speak over the clerks, and tell the customer to send Parcel Post while we "explain the feature and benefits" of Priority Mail. I cant agrue with them...we treat the PP like it's Priority Mail.

I concur with the comments above and can "second" the comments made by the rural carrier. I work at an NDC and everyday we receive truckloads of mail from FedEx (Smartpost) and UPS (Mail Innovations) which are apparently cheaper for USPS to deliver than the original carrier. Makes you wonder how much FedEx and UPS make on the pieces before dropping them en mass at an NDC for more than "last mile" service? Also makes you wonder if FedEx or UPS would want this advantageous partnership to collapse with the USPS?

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Blog Author

Alan Robinson is the President of the Direct Communications Group and an associate of Analytic Business Services (AnaBus). He has over twenty years experience helping firms and government officials deal with the regulatory, policy, marketing, and management issues associated with changes in competition within transportation, parcel delivery and postal markets.
He can be reached at alan.robinson@directcomgroup.com